Monopolies often charge prices that exceed their marginal cost, which allows them to earn profits. Among monopolies though, the degree to which firms can mark up prices varies. Differences in what characteristic explains the extent to which monopolies can mark up prices? the firm's cost structure the firm's approach to marketing their product how strictly patents are enforced in the relevant country the price elasticity of demand for the firm's output The table describes characteristics of four firms. Price elasticity of demand Strength of patent protection Cost structure Marketing approach Firm A very inelastic second weakest constant MC direct marketing Firm B unit elastic Firm C Firm D elastic perfectly elastic weakest second strongest strongest rising MC interactive marketing falling MC mass marketing exponential MC no marketing Use this table and the appropriate criteria from the first question to determine which firm will be able to mark up price most significantly. Firm A Firm D Firm C Firm B
Monopolies often charge prices that exceed their marginal cost, which allows them to earn profits. Among monopolies though, the degree to which firms can mark up prices varies. Differences in what characteristic explains the extent to which monopolies can mark up prices? the firm's cost structure the firm's approach to marketing their product how strictly patents are enforced in the relevant country the price elasticity of demand for the firm's output The table describes characteristics of four firms. Price elasticity of demand Strength of patent protection Cost structure Marketing approach Firm A very inelastic second weakest constant MC direct marketing Firm B unit elastic Firm C Firm D elastic perfectly elastic weakest second strongest strongest rising MC interactive marketing falling MC mass marketing exponential MC no marketing Use this table and the appropriate criteria from the first question to determine which firm will be able to mark up price most significantly. Firm A Firm D Firm C Firm B
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 11PAE
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Transcribed Image Text:Monopolies often charge prices that exceed their marginal cost, which allows them to earn profits. Among monopolies
though, the degree to which firms can mark up prices varies.
Differences in what characteristic explains the extent to which monopolies can mark up prices?
the firm's cost structure
the firm's approach to marketing their product
how strictly patents are enforced in the relevant country
the price elasticity of demand for the firm's output
The table describes characteristics of four firms.
Price elasticity of demand Strength of patent protection Cost structure Marketing approach
Firm A
very inelastic
second weakest
constant MC
direct marketing
Firm B
unit elastic
Firm C
Firm D
elastic
perfectly elastic
weakest
second strongest
strongest
rising MC
interactive marketing
falling MC
mass marketing
exponential MC
no marketing
Use this table and the appropriate criteria from the first question to determine which firm will be able to mark up price
most significantly.
Firm A
Firm D
Firm C
Firm B
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